Special Considerations – Cost Sharing and Effort Reporting October 21, 2014

1. Special Considerations – Cost Sharing and Effort ReportingOctober 21, 2014 Presenters: Sandy Mason Robert Ellington

2. Introduction ….. Georgia Tech Portion $250,000 Sponsor Portion $250,000 Total Project $500,000

3. Overview I. Office of Sponsored Programs - Policies II. OMB Circular A-110 Cost Sharing or Matching III. Managing Cost Share Projects in the GM System IV. Special Cost Share Procedures V. Words from a Sponsor – NSF VI. Audits of Cost Share Expenditures VII. Discussion Summary

4. I. Office of Sponsored Programs – Policies Georgia Institute of Technology Office of Sponsored Programs Policies & Procedures Manual POLICIES AND PROCEDURES Post-award Management – Financial Administration: 4.3 Subject: Cost Sharing http://policy.research.gatech.edu/43-cost-sharing

5. I. Office of Sponsored Programs – Policies 1. Whenever cost sharing is proposed as part of a sponsored project, the source of funds must be identified and approval obtained from the person with authority to commit those funds. 2. If the source is identified as "To Be Determined", the funds from the unit originating the proposal are obligated until an actual source is committed prior to the time of award. 3. Funds to be provided by entities outside of Georgia Tech, typically referred to as “third-party” cost sharing, must be supported at the proposal stage by written documentation from the outside entity indicating their commitment to provide cost sharing.

6. I. Office of Sponsored Programs – Policies 4. Cost sharing funds are actually made available to the Project Director/Principal Investigator (PD/PI) when/if the proposal results in a sponsored award. 5. Cost sharing approvals are obtained by way of the Proposal Routing Form and a Cost Sharing Approval Form. 6. The Office of Sponsored Programs (OSP) furnishes a management report of all outstanding cost sharing commitments associated with pending sponsored proposals to the Office of the President on a monthly basis.

7. I. Office of Sponsored Programs – Policies 7. Upon receipt of a sponsored award, OSP obtains a sponsored project number and a cost sharing project number from either Grants & Contracts Accounting or GTRI Accounting, as appropriate. 8. This process opens chargeable projects for the PD/PI and the responsible unit to use during the course of the project. 9. The sponsored and cost sharing project budgets, provided by OSP to the appropriate accounting office, will be valued at the funded amount of the sponsored award and at the associated amount of committed cost sharing respectively.

8. I. Office of Sponsored Programs – Policies 10. It is the responsibility of the PD/PI or the unit business officer to work with appropriate personnel in the Dean’s Office or President’s Office to make available committed cost sharing funds from that authority's sources. 11. In the case of a President's Office obligation, the PD/PI must submit a written request for the necessary cost sharing funds which are generally provided by way of GTRC Matching Grants.

9. I. Office of Sponsored Programs – Policies 12. It is important that the PD/PI and his/her unit business officer identify appropriate charges to be applied against cost sharing projects throughout the life of a sponsored award. 13. All required cost sharing obligations must be met and properly documented in the Institute accounting system before the projects can be financially closed out.

10. II. OMB Circular A-110 Cost Sharing or Matching Acceptable Costs C23a:All contributions, including cash and third party in-kind, shall be accepted as part of the recipient’s cost sharing or matching when such contributions meet all of the following criteria: (1) Are verifiable from the recipient's records. (2) Are not included as contributions for any other federally-assisted project or program. (3) Are necessary and reasonable for proper and efficient accomplishment of project or program objectives. (4) Are allowable under the applicable cost principles.

11. II. OMB Circular A-110 Cost Sharing or Matching Acceptable Costs (Continued) (5) Are not paid by the Federal Government under anotheraward, except where authorized by Federal statute to be used for cost sharing or matching. (6) Are provided for in the approved budget when required by the Federal awarding agency. (7) Conform to other provisions of this Circular, as applicable.

12. II. OMB Circular A-110 Cost Sharing or Matching • Facilities & Administrative (Indirect) Costs • C23b: Unrecovered indirect costs may be included as part of cost sharing or matching only with the prior approval of the Federal awarding agency. • Allowable for Recorded Expenditures • Values for Recipient Contributions • C23c: Values for recipient contributions of services and property shall be established in accordance with the applicable cost principles.

13. II. OMB Circular A-110 Cost Sharing or Matching • Services by Volunteer or Employee Services • C23h(5i). Volunteer services shall be documented and supported by the same methods used by the recipient for its own employees • Documented after-the-fact (Hours, Date, Rate) and certified • Volunteer or Employee Services • C23d: Volunteer services furnished by professional and technical personnel… and other skilled and unskilled labor may be counted as cost sharing if the service is an integral and necessary part of an approved project. • Rates for volunteer services shall be consistent with those paid for similar work in the recipient’s organization.

14. II. OMB Circular A-110 Cost Sharing or Matching • Volunteer or Employee Services (continued) • If the required skills are not found in the recipient organization, rates shall be consistent with those paid for similar work in the labor market in which the recipient competes for the kind of services involved. In either case, paid fringe benefits that are reasonable, allowable, and allocable may be included. • C23e: When an employer other than the recipient furnishes the services of an employee, these services shall be valued at the employee’s regular rate of pay (plus fringe benefits that are reasonable, allowable, and allocable), provided these services are in the same skill for which the employee is normally paid.

15. II. OMB Circular A-110 Cost Sharing or Matching • Donated Supplies • C23f: Donated supplies may include such items as expendable equipment, office supplies, laboratory supplies or workshop and classroom supplies. Value assessed to donated supplies included in the cost sharing share shall be reasonable and shall not exceed the fair market value of the property at the time of the donation. • Donated Equipment, Buildings, and Land • 23h: The value of donated property shall be determined in accordance with the usual accounting policies of the recipient…

16. II. OMB Circular A-110 Cost Sharing or Matching • Determining the Value of Donated Property • Basis: “Fair Market Value” • Must be documented and certified • C23h(1). The value of donated land and buildings shall not exceed its fair market value at the time of donation to the recipient as established by an independent appraiser (e.g., certified real property appraiser or General Services Administration representative) and certified by a responsible official of the recipient.

17. II. OMB Circular A-110 Cost Sharing or Matching * Voluntary Cost Share in proposal becomes mandatory in award “Don’t say it if you don’t really mean it!” * Beware of expressions of support in budget narratives and work-scope that are not included in the budget figures

18. III. Managing Cost Share Projects in the GM System Cost Sharing Projects • Institute procedures for cost sharing provide for the identification of specific projects to account for cost sharing expenditures required for sponsored projects. • At project initiation, OSP identifies the amount of the cost sharing obligation for each agreement and a separate Project is established to account for the expenditures as they are made during the performance of the sponsored activities. • Occasionally other cost sharing projects are established to provide additional or alternate funding for cost sharing expenditures and these projects need to be identified to the G&C Project Accountants as they are established. This is necessary to assure proper accounting and reporting.

19. III. Managing Cost Share Projects in the GM System Other (“un-linked”) Cost Sharing Expenditures • Occasionally expenditures made from other projects (projects not specifically identified as cost sharing projects) are to be recognized to meet the required cost share obligations. • Although this type of activity does not meet the Institute requirements for separately budgeted and accounted for expenditures, it can be recognized to meet cost sharing requirements if it is properly documented and supported. When this occurs, the following steps must be taken: • If possible, a separate project should be established that is identified as a cost sharing project for the sponsored agreement, and the costs should be moved to that project by cost transfer.

20. III. Managing Cost Share Projects in the GM System Other (“un-linked”) Cost Sharing Expenditures (Continued) • If the costs were incurred in a prior year and/or time does not permit the creation of a separate sponsored project: • The costs to be recognized as cost sharing should be documented on a separate schedule supported by project ledgers that identify the specific charges to be recognized. • A written certification statement should be prepared and signed by the Project Director indicating that the expenditures identified on the cost sharing schedule (Sample provided in Section IV): • Were incurred on behalf of the sponsored agreement • Meet the Cost Sharing requirements stated in the sponsored agreement • Have not been claimed as direct charges or cost sharing on any other sponsored project.

21. III. Managing Cost Share Projects in the GM System Facilities & Administrative (F&A) Charges – State Cost Sharing Projects • Unless there is a specific restriction contained in the sponsored agreement that precludes recognition of F&A charges on cost sharing expenditures, G&C Accounting will recognize F&A charges on cost sharing projects at the current approved rate for that activity. • These charges will be recorded in the G&C Accounting System records and will be reported on the WEB PEB. Facilities & Administrative (F&A) Charges - GTF or GTRC Projects • The GM System does not charge F&A costs to projects funded by GTF or GTRC • G&C Accounting will recognize F&A charges on cost sharing expenditures made with these funds for reporting purposes, unless there is a specific restriction contained in the sponsored agreement that precludes recognition of F&A charges on cost sharing.

22. III. Managing Cost Share Projects in the GM System • OSP Identifies Cost Share Obligation at time of Award • Obligation may cover several years • Specific Projects are Established to Account for and Report all Cost Share Expenditures • Initial Cost Share Project Numbers are Assigned to Unit • Budgets are Established when Funding is Provided

23. III. Managing Cost Share Projects in the GM System • Additional Projects can be Assigned for Other Funding Sources • GTRC or Other Outside Fund Sources • All Cost Share Projects Linked to Main Project • Cost Share Obligations are Presented in PEB • Demographic Section

24. III. Managing Cost Share Projects in the GM System • Initiating Cost Share Budgets • Budgets to be Entered as Funding is Provided • State Funded Budgets are to be established by Unit Financial Manager and Budget Office • GTRC Funded Cost Share Budgets are Established by G&C /GTRI Accounting upon Receipt of Notification from the Office of the Provost Financial Administration

25. Calculating The Amount of Funding Required (Examples) Cost Share Requirement $ 50,000 $ 50,000 $ 50,000 Expenses Salaries $ 20,000 $ - $ 10,000 Fringe Benefits 4,800 - 2,500 M & S 8,313 - 12,000 Equipment - 50,000 13,005 Total Direct $ 33,113 $ 50,000 $ 37,505 Recognized F&A (at 51.0%) $ 16,887 $ - $ 12,495 Total Cost Share Recognized $ 50,000 $ 50,000 $ 50,000 State Funding Required $ 33,113 $ 50,000 $ 37,505 III. Managing Cost Share Projects in the GM System (C) (A) (B)

26. III. Managing Cost Share Projects in the GM System – Summary • Reported on OSP Project Header

27. III. Managing Cost Share Projects in the GM System – Summary PEB Report – Sponsored Summary • Includes ALL related sponsored projects and sub-projects

28. III. Managing Cost Share Projects in the GM System – Summary

29. III. Managing Cost Share Projects in the GM System – Summary • PEB Report- Cost Share Summary • Includes ALL related/linked cost share projects • Cost Share Obligation Reported in Demographic Section

30. III. Managing Cost Share Projects in the GM System – Summary GM PEB

31. IV. Special Cost Share Procedures - Exceptions • In-Kind Cost Share Certification • Required for Third Party Cost Share Expense • Required for Donated Services or Facilities • Recorded in GIT GM System as “Other Memo” • In-Kind Cost Share Tuition Remission • Requires Specific Sponsor Approval • Accounting For In-Kind Tuition Remission • Recorded in GIT GM System as “Other Memo”

32. IV. Special Cost Share Procedures - Exceptions • Sample Certification Letter – Also used for: • All “Un-linked” GIT Cost Share Expenses • Certifications Required by Sponsors ** Accounting system support must be attached

33. IV. Special Cost Share Procedures - Exceptions Accounting For In-Kind Tuition Remission • The Institute currently has no accounting system to document the amount of tuition waivers on State funded cost sharing projects • In accordance with federal regulations, cost sharing expenditures must meet the same requirement as direct cost. • Certain sponsors may recognize the cost of tuition waivers as In-Kind cost sharing when the amount of the waivers is properly documented and reported to the sponsor • This type of In-Kind cost sharing must be fully documented in the project proposal and project budget.

34. IV. Special Cost Share Procedures – Exceptions Accounting For In-Kind Tuition Remission (Continued) • In instances where a sponsor will recognize In-Kind Tuition Remission as cost sharing, the following procedures should be followed to provide required documentation. • When the award is approved and the project is established in the accounting system, a separate cost sharing account should be established to record the In-Kind cost sharing expense as it is incurred. • At the completion of each registration period, the Project Director or designated financial manager will direct the preparation and subsequent approval of a “Using Non-Sponsored Tuition and Fee Waivers as In-Kind Cost Sharing” form. • A copy of the completed form will be forwarded to the Grants & Contracts Accounting Office where it will be used to record the amount of the waivers to the Cost Sharing Project as In-Kind cost sharing. • Project Expenditure and Budget (PEB) reports for the Cost Sharing project will be used to document and support the cost sharing requirement to the sponsor.

35. IV. Special Cost Share Procedures – Exceptions Accounting For In-Kind Tuition Remission

36. IV. Special Cost Share Procedures – Exceptions

37. IV. Special Cost Share Procedures – Exceptions

38. VI. Audits of Cost Share Expenditures • OMB Circular A-133 Requirements • Allowable Costs - Test of Expenditures • Verifiable from Institute Financial Records • Tests of In-Kind Cost Share Documentation • Audit Test Procedures • Allowable costs • Allowable Funding Source

39. VII. Summary * Cost Share Obligation Identified by OSP at the time of the acceptance of new awards * Separate Projects are established for each Cost Share Obligation and Fund Source * Cost Share Project Budgets Represent Available Funds • State Cost Share Budgets set by Budget Office • GTRC Funded Cost Share Budgets set by G&C Accounting (as approved)

40. VII. Summary * Cost Share Obligations are Presented on PEB. * Cost Share Obligation must be met to avoid adjustments to Direct Cost Expenditures. * Cost Share Obligation must be Recorded in Institute Financial Records. * Special Procedures may require extra work for the Unit Financial Managers.

41. Q & A Authorization to expend funds from a Cost Share project occurs when? The budget for a Cost Share Project funded from Departmental resources is established by _____ ? The Budget for a Cost Share Project funded from GTRC resources is established by _____ ? The best and easiest method to account for Cost Share expenses is _____ ? What happens if a cost-share obligation is not met?

42. Other Questions? Contact: gc.ask@business.gatech.edu orSandy Mason, 404-894-5526 sandy.mason@business.gatech.edu

43. Personal Services Reporting Using the Plan Confirmation System (PCS)

44. Plan Confirmation System Personal Services Reporting Using the Plan Conformation System • Why Personal Services Reporting (aka: Effort Reporting) • OMB Circular A-21 • Plan-Confirmation System: Professorial and Professional Employees, Graduate Students • After-the-Fact Activity Records–Non-Professional Employees (Hourly) • Salary Planning and Distribution (SPD) System • SPD Center • Electronic Workload Assignment Form (EWAF) • Departmental Responsibilities Related to the Plan Confirmation System Process • Annual Statement of Reasonableness (ASR) of Salary Charges and Signatory Certification Requirements • Employee Responsibilities • SPD Redistributions • NIH Salary Cap • NSF 2/9ths Salary Limitation • Level of Commitment

45. Plan Confirmation System Overview As a major research university that manages over 3,500 sponsored agreements (>6,000 Non-GTRI “Projects”), Georgia Institute of Technology must have: • Financial systems and procedures in place to assure compliance with the terms and conditions of the agreements as well as with State and Federal regulations concerning sponsored programs. • The distribution of salary and fringe benefits charged to sponsored programs is the majority of project expenditures and therefore a very important process.

46. Plan Confirmation System Background The Federal Government's Office of Management and Budget (OMB) Circular No. A-21, Revised • Establishes principles for determining costs applicable to grants, contracts, and other agreements between Federal agencies and educational institutions. • All Federal agencies that sponsor research and development, training, and other work at educational institutions must apply the provisions of this Circular in determining the costs incurred for such work.

47. Plan Confirmation System (OMB) Circular No. A-21 The Federal Government's Office of Management and Budget (OMB) Circular No. A-21, Revised • The provisions of OMB Circular No. A-21 apply to all units of Georgia Tech other than the Georgia Tech Research Institute. • Employees of Georgia Tech Research Institute utilize hourly time sheet procedures designed to comply with Federal Acquisition Regulations 31.2, which have different requirements for the documentation of personal services expenses. • The GTRI Policies & Procedures Manual includes specific instructions for GTRI time sheet preparation and time reporting.

48. Plan Confirmation System (OMB) Circular No. A-21 OMB Circular No. A-21 identifies three acceptable methods for handling payroll distributions: • The After-the-Fact Activity Records system, • The Plan-Confirmation system, and • A system of multiple confirmation records. Georgia Tech uses: • The Plan Confirmation System for Professorial and Professional Employees, and Graduate Students. • The After-the-Fact Activity Records System for Non-Professional Employees (Timesheets).

49. Plan Confirmation System Plan-Confirmation System Plan-Confirmation System • Under this method, the distribution of salaries and wages of professorial and professional staff applicable to sponsored agreements is based on budgeted, planned, or assigned work activity, updated to reflect any significant changes in work distribution.

50. Plan Confirmation System Plan Confirmation System & OMB Circular A-21 OMB Circular A-21 A plan-confirmation system used for salaries and wages charged directly or indirectly to sponsored agreements will meet the following standards: • J10c(1)(a) A system of budgeted, planned, or assigned work activity will be incorporated into the official records of the institution and encompass both sponsored and all other activities on an integrated basis. The system may include the use of subsidiary records.